Superannuation and Year-end tax planning

The end of financial year 2015 is looming and once again, it is that time of the year where you need to lodge your tax returns. In conjunction with lodging in tax returns, you may want to reassess your superannuation fund to obtain the most tax-effective strategy for the year-end tax planning.

How can superannuation provide the most tax-effective strategy? The money that your employer contributes to your superannuation fund and the earnings within the fund are taxed only at 15%, compared to your marginal tax rates.

Considering about getting insurance cover and not diminishing your cash flows? Insurance cover such as Life, Total and Permanent Disability, and Income Protection can be incorporated into your superannuation fund. This allows the insurance premiums to be paid out of your superannuation fund balance instead of your own pocket.

Do you know where your superannuation fund is invested in? The right investment option for you depends on your risk tolerance. Having a higher risk tolerance allows you to earn a higher return but exposes you to greater losses if the markets fall.

Consider salary sacrificing to your superannuation as it could save you thousands in tax. This will allow you to increase your superannuation balance and reduce the amount of income tax payable on your salary.

Income Year

Under 50

50 – 59 Years Old

60 Years and Over

2015/2016

$30,000

$35,000

$35,000

Table: Concessional Contributions Cap

Are you 55 or over and still working? At preservation age, you can access your superannuation funds by commencing a TTR (Transition to Retirement) Pension by drawing down an income between 4% – 10% of your superannuation account balance each year.

* Your preservation age depends on the year that you were born

Date of Birth

Preservation Age

Before 1 July 1960

55

1 July 1960 – 30 June 1961

56

1 July 1961 – 30 June 1962

57

1 July 1962 – 30 June 1963

58

1 July 1963 – 30 June 1964

59

1 July 1964 and Onwards

60

Table: Preservation Age

Earning less than $50,454? You would be able to receive government co-contribution up to $500 if you make personal (after-tax) super contributions to your superannuation fund.

Year

Maximum Entitlement

Lower Income Threshold

Higher Income Threshold

2015-2016

$500

$35,454

$50,454

Table: Co-Contribution Income Thresholds

Having more than one superannuation account? Do not forget to consolidate your superannuation funds to avoid paying excessive fees.